Swiss Re provided a type of reinsurance to Reliance Insurance Company for insurance of residual value insurance policies covering certain automobile risks. When Reliance became financially impaired, Swiss Re litigated liability and damage issues directly with the insured, Keybank USA. In a complicated 67 page opinion on cross motions for summary judgment, the District Court granted in part and denied in part the motions of both parties. This opinion considers multiple issues of contract interpretation, mitigation of damages and expert testimony. The Court recently entered an Order denying the motion of Keybank for reconsideration of the portion of the prior Order that granted partial summary judgment to Swiss Re with respect to auto leases that were part of Keybank's lease extension program. Reliance Insurance Co. v. Keybank U.S.A., Case no. 01-62 (USDC N.D. Ohio Dec. 20, 2006).
Arbitration / Court Decisions
Court denies motion to dismiss in a case involving the interpretation of a commutation agreement
In a terse one sentence ruling, a District Court has denied a motion to dismiss a Complaint alleging a number of claims with respect to a Commutation Agreement of certain reinsurance agreements. The Defendant contended that the Commutation Agreement unambiguously released it from all liabilities, while the Plaintiff countered that the Defendant's reliance on extrinsic evidence in its motion demonstrated that the agreements were not unambiguous, requiring the denial of the motion to dismiss. ACE Tempest Reinsurance, Ltd. v. Converium Reinsurance (North America), Inc., Case No. 06-1059 (USDC S.D.N.Y. Nov. 30, 2006).
Court affirms stay of state court action pending resolution of federal court action
A New York state appellate court has affirmed a stay of an action involving Lloyd's in deference to a pending federal court action concerning coverage and indemnity for asbestos-related claims. In a perfunctory opinion, the court noted that the plaintiffs in the underlying action had “remained inactive for 20 years ….” While the state court action had been filed three years before the action was filed in federal court, the appellate court based its decision on “the familiarity of the federal court with the issues, the substantial identy of the parties, and the interdependence of the issues involving primary and excess insurers ….” Certain Underwriters at Lloyd's London v. Pneumo Abex Corp., Index 602493/02 (App. Div. Jan. 9, 2007).
Court remands case to new arbitration panel for further proceedings
After partially vacating an arbitration award as being in manifest disregard of law, a District Court has remanded the case to a new arbitration panel for further proceedings. The Court found it inappropriate to remand the case to the same arbitration panel for further proceedings relating to the issue as to which it had found that the panel had manifestly disregarded Pennsylvania law. Koken v. Cologne Reinsurance (Barbados) Ltd., Case No. 98-0678 (USDC MD Pa Dec. 5, 2006).
District Judge files appellate brief in KPMG criminal tax case
In a highly unusual event, United States District Judge Lewis Kaplan has filed a brief with the United States Court of Appeals for the Second Circuit, defending his opinion relating to the arbitrability of issues relating to KPMG paying attorneys fees for defendants in a criminal tax action, which was the subject of a post on this blog on September 26, 2006. This brief was invited by the Second Circuit in an Order entered December 13, 2006, which provided in part: “Pursuant to Fed. R. App. P. 21(b)(4), we now invite the District Court to address, if it so chooses, the motion for leave to file a mandamus petition.” Stein v. KPMG, LLP, Case No. 06-4358 (2d Cir. Jan. 8, 2007).